(By Mike Swanson) CNBC has stopped talking about Greece, but I haven't taken my eyes off of the Greek stock market. As I posted the other day it has already fallen to an extremely low valuation and is now the cheapest stock market in the world when looked at from a fundamental perspective.
But I don't think the time to buy is just yet.
The Greek stock market has bounced since its June elections, but that bounce appears to have stalled out. The market is likely just starting its stage one basing phase. In my opinion it will probably drop again in the Fall and break new lows to make a final bottom or make a double bottom.
The Greek stock market is going through some sort of short-term sideways phase like it did from February to May - but this time that sideways phase may happen more quickly before it rolls over and drops back down.
The pro-euro part that got in power in June is already facing problems with the austerity programs. According to an Associated Press story yesterday:
The head of a party in Greece's new coalition government on Tuesday said the country's recession made it "almost impossible" for it to achieve the €11.5 billion ($14.1 billion) in cuts over the next two years demanded by its rescue creditors.
Socialist party leader and former Finance Minister Evangelos Venizelos made the comment in a radio interview, a day before he is to meet conservative Prime Minister Antonis Samaras to discuss the cuts.
"It is very difficult, almost impossible for anyone to put cuts together worth €11.5 billion in 2013 and 2014," Venizelos told private Vima radio. "That difficulty has always been there, but the (situation) has deteriorated because the predictions for the recession in 2012."
Greece has enough money to last it through the month of August and then it will need another aid pump from the European IMF forces.
The way things stand it looks like the situation will deteriorate by the end of the year to bring another round of elections in Greece. That would spell more turmoil for the financial markets - and a final end to the Greek debt crisis.